(Fortune) -- Jeff Immelt, the chief executive of General Electric (GE, Fortune 500), was getting defensive - and for good reason. "Look," he protested,
"I've never voted for a Democrat!" Immelt went on to insist he's getting a bum rap. "I work for investors," he said.

Speaking Thursday at a Wall Street Journal conference on business and the environment, Immelt had come under attack for what was called a "big government" solution to climate
change, namely mandatory federal regulation of greenhouse gases.

Kimberley Strassel, a columnist for The Journal, criticized Immelt for taking tax subsidies for GE's wind turbines. And the leader of a conservative think tank, the Competitive
Enterprise, accused him of being insufficiently committed to free markets.

The Journal's first ECO:nomics conference, held this week at spectacularly beautiful seaside resort in Santa Barbara, Calif., has had its bizarre moments.

A star-studded lineup of CEOs - Immelt, Lee Scott of Wal-Mart (WMT, Fortune 500), Jim Rogers of Duke Power (DUK, Fortune 500) and Andrew Liveris of Dow Chemical (DOW, Fortune 500) - all showed up to say that they are strongly committed to federal
action to cap greenhouse gas emissions. They argue that restrictions will unleash entrepreneurs and big business alike to move America towards a clean-energy economy.

"This is the largest economic opportunity of the 21st century," said venture capitalist and clean-tech evangelist John Doerr.

This can-do attitude was met with grumbling from conservatives who warn that federal carbon regulations will drive up energy prices for consumers. They are right, of course. But the
higher prices for oil, coal and gas are exactly what's needed, the CEOs argued, to spur innovation and reduce America's dependence on imported oil. Besides, they said, how can the
market work properly if there's no cost for emitting greenhouse gases, which cause global warming, into the air?

It was a stark reminder of how decisively the climate policy debate has shifted in the last couple of years.

Today, those favoring government carbon regulation include of big business (even a few oil and auto companies), environmental groups (as expected), Republican governors like Arnold
Schwarzenegger of California and Charlie Crist of Florida, and the three leading U.S. presidential candidates, whose policy advisors all came to Santa Barbara to argue for a
cap-and-trade system to manage a greenhouse gases.

And who's against regulation? Well, there's the lame-duck Bush administration. The free-market think tanks like CEI. And the Journal's editorial page, which runs the risk of
becoming irrelevant if it won't engage in the debate about how to deal intelligently with climate change. (To quote Rupert Murdoch, the Journal's new owner: "Climate change
poses clear, catastrophic threats. We may not agree on the extent, but we certainly can't afford the risk of inaction.")

Climate-change legislation "is going to happen," Immelt said, and he plans to be at the table when the law is written. "I think our country could have a great competitive edge if we
don't put our head in the sand," he said.

Immelt said GE's EcoMagination campaign, a marketing effort built around selling products like energy-efficient jet engines and locomotives that help solve environmental problems, has
driven GE's revenues, created jobs in the United States and spruced up the company's image.

"People graduating from college today are mission driven," he said. "Our ability to recruit has never been higher than it is right now."

For his part, Lee Scott said the current economic slump will not slow down Wal-Mart's sustainability efforts, and he disclosed that the company will aggressively seek to improve the
social and environmental practices of his suppliers in China.

The fact that consumers feel squeezed "ought to add a sense of momentum to what we are doing," Scott said. "When is there a better time to reduce packaging and reduce energy
expenses?" That'll save his customers money.

This fall, Wal-Mart plans to convene a meeting of about 1,000 suppliers in China, and he'll be there. The company will "lay out for them the entirety of where this has to go, and they
are going to have to participate if they want to do business with us." Translation: Wal-Mart still wants low prices for its consumers, but not at the expense of polluting the air and
water in China.

Unlike some conservatives at the event who accused environmental groups of browbeating business, Scott went out of his way to praise the nonprofits. "We would not be where we are
today without [these groups]," he said. "And when we started this process, we thought of them as the enemy."

He even questioned, slyly, why a bottle of Evian water was waiting for him on the podium. "I'm surprised that at this conference you would have bottled water," he said. But he added
that Wal-Mart would continue to sell bottled water - an environmental no-no in some quarters - so long as customers want it.

Later, after a lively discussion during which advisors to Hillary Clinton, John McCain and Barack Obama talked about what form climate-change legislation should take, the
Journal's Alan Murray polled the audience to see which candidate - and which climate change plan - people in the audience liked best.

"What about none of the above?" asked a member of a conservative think tank.